FDR

One of the goals of President Franklin D Roosevelt was to add a second Bill of Rights to the constitution. The Founding Fathers set up the constitution to limit the power of the federal government. They had lived under the tyranny of the King and wanted to avoid that at all cost. The first ten amendments place limits on the power of the federal government. FDR proposed a second bill which included the right of the government to guarantee a job with a living wage, adequate housing for all citizens, adequate medical care for all, education for all and social security for all. He tried to pack the Supreme Court to accomplish this end but was thwarted by the congress. President Obama feels the same way about the constitution but he is trying a different approach. He wants to transfer the power of the constitution to the federal government using presidential decrees and this will eliminate congress from getting in the way. The way he has chosen to accomplish this is by offering more and more benefits to people and causing them to become more dependent on government. If he can get a majority of the voters to side with him he can move toward bigger government. As voters get accustom to unemployment compensation, food stamps, housing assistance, medical assistance, low interest education loans and more dependent on social security for retirement he can get the second list that FDR strived for. Compare the list by FDR with programs we now have on the books. Guaranteed job Unemployment compensation and welfare benefits along with increasing the number of government employees Housing Every person having the right to home ownership……backfired with the mortgage crisis. Medical Obama care (Medicaid for all) Education low interest student loans provided only by the federal government Social security most popular and most expensive

Cities going broke

San Bernardino, CA a city of 200,000 filed for bankruptcy. Experts say this trend will continue across the state as more and more cities find they are unable to meet their legacy requirements. These cities have promised pension and health care benefits that they cannot afford. I have talked about this many times in the past and it is happening to private companies, but more so to public groups like Municipalities, Counties, School Districts and States. Unlike the federal government which is the worst offender these entities cannot print their own money. To explain how this happens you look back over the past thirty plus years to how public unions have negotiated contracts. The cities union leadership backs a particular candidate for city council and using their influence they get that person elected. Then they sit down across the table from that person and negotiate their contract which includes pension and health care. About one third of the people in this town are living below the poverty level but there are 440 retirees who have pensions above $100,000 per year. One former sheriff gets $290,000. Over the past ten years the city has sold bonds to have money to put into the pension fund and it is still short. Wert said the county's retirement obligations will increase dramatically over the next five years. In 2010-11, the amount was $6 million. For 2011-2012, it will grow to $23.6 million and then to $43.5 million and $66.5 million the next two years. By 2014-2015, the county's costs will escalate to $85.1 million. We have witnessed this same back scratching in the salaries of CEO’s. A is a CEO and on the board of directors for B’s company. B in on my board and we each agree to give each other a big raise. CEO salaries used to be 20 times what the average employee made and today they are 500 times. The state representatives negotiate with state workers, the county workers with the elected county commissioners, the city workers with the elected city council members and the teachers with the elected school board. Scratch, scratch, scratch.

Reason to vote

I think the American People in their own immutable way have finally condensed the complex economic concepts of governance into a one sentence easily understood statement. We will vote for Obama because he is more likable. Now I feel better

Post Office

The Post Office is one of many businesses that are changing because of the Internet. They are losing business as people pay bills on line and write emails instead of letters. It is in the process of going out of business but in an attempt to stave off the end the Union has come up with a story that may not be true. In 2006 the congress told the Post Office that they had to put more money into their pension fund and into the fund that pays for health care so the government would not have to step in and bail them out. Each year for ten years starting in 2007 the PO is required to put 5 billion into these two funds. This has accelerated the losses and caused management to threaten lays offs and curtail Saturday delivery. The Union says the problem is not fewer letters but the payments to the pension and that these payments are not necessary. They maintain that these two funds have more funding that is needed and they want to divert some of these pension monies to current expenses to keep from having lay-offs. The Government Accounting Office (GAO) has recently released a report saying that the pension funds do not have extra money and if the 5 billion payments are not made the funds will run short and the taxpayers will have to bail out the PO. As the United State Postal Service faces dire financial straits, a report to be released Thursday by the Government Accountability Office asserts that the solution suggested by USPS would not solve the Postal Service’s financial problems, and would instead result in what would essentially be a taxpayer bailout. USPS contends that the $8.5 billion it lost last year, and the $10 billion it is projected to lose this year, is because it has paid too much money to the federal government to fund retiree health benefits, and it would like to be given access to that overpaid sum in order to help alleviate some of the financial pressure. But in a document obtained by The Daily Caller to be released later on Thursday, the GAO says that based on its analysis, there is no such overpayment. Moreover, it concludes, to pay out the requested money would only stave off disaster, not solve USPS’ underlying financial problems, and instead, it would simply increase the federal government’s liability, which would have to be funded through tax revenue and borrowing, in other words, by taxpayers.

Supreme Court

Every time I heard Romney say he would overturn Obamacare if elected I knew it was all talk because he would need 60 votes in the senate to overcome the filibuster that the Democrats would use. Since the Supreme Court ruling on Obama care, all of that has changed. Since the court ruled that the so called penalty for not buying insurance is in fact a tax it is a new ballgame. Through a process called reconciliation a law can be overturned with 51 votes if it involves taxes. With this new ruling, if Romney is elected and the Republicans gain three seats in the Senate they will be able to repeal Obamacare. The other thing the court did was to make it more difficult for congress to pass further laws regarding the commerce clause. This was the clause that allowed the government to pass laws that the states objected to. For example they passed Obama care as insurance reform and said anything that is sold on an interstate basis could be regulated by the federal government. Another part of this changed the way congress could encourage states to follow regulations by taking away funding. The law says that states must accept money from the federal government to implement the Medicaid portion of Obama care. In the past if the states refused the feds would cut off all funding but the court has called that coercion and it is no longer allowed.

Pension at 62

I can say that since my house was appraised at $370,000 in 2006 and today it appraises at $270,000 that I have lost $100,000 but that would not be the whole story. When I built the house in 2002 it cost $220,000 so I could sell it today and make $50,000 so have I really lost money? I mention this because something similar is happening with public pensions. Over the years defined benefit pension plans provided to public employees have been overly generous and now many of these plans are underfunded, that is, they don’t have enough money to pay the promised benefits. People now say they have lost income because their pension must be reduced to avoid bankruptcy. Most of these plans allow employees to retire at age 62 and have more net income than when they were working. That tells you something is out of whack. Average life expectancy for someone age 62 is 21 years.

Gays

Not being a person who shies away from controversy I am interested in the current debate over gay marriage and how there is an open discussion about the fairness aspect and a hidden issue about the practical aspects. An open minded liberal person is the one who presents the arguments about people loving whom they please and this is difficult to refute. Let’s go deeper into the subject and see if we begin to lose some of these liberal thinkers. On most evening TV shows and many afternoon Soaps you can see a man and woman in compromising situations and most people don’t pay a lot of attention. Allow me to change the scene. You have two men, scantily clad in bed with their hands roaming over each other while they are feverishly open mouth kissing. Anyone getting uncomfortable yet? Next move away from the TV and imagine these same two in the privacy of their home. Does sodomy come to mind? This is not some abnormal sexual activity but the normal practice of most gay men. Does this make many people uncomfortable? I claim that it does and that is the reason why you don’t see the intimacy on TV with gays that you see with straights. I maintain that most people do not think of the sexual acts when they decide their view on gay marriage. If thoughts like that happen into their minds they quickly push them aside. Now here is the final test. Did you feel a little uneasy just reading this? Are you concerned that you may not be as open minded as you thought?

Palin

Several talking heads in discussing the choice of Vice-President for Romney said that he doesn’t want to make the mistake of picking an unknown like Palin as this they say cost McCain the election. I say humbug! Throughout the spring and summer of 2008 polls showed Obama with a 6 point lead over McCain. The Republican convention in early September showed a shift in the polls giving a 6 point lead to McCain. The pick of Mrs. Palin, a first-term Alaska governor, appears to have energized a Republican base wary of Mr. McCain, and according to the poll conducted by ABC News and the Washington Post, the Republican ticket has opened up a lead among white women, who had been supporting Mr. Obama. In early September Lehman Brothers, a large New York bank was in trouble and the government refused to bail them out and they filed for bankruptcy. That day and the following few days the Dow lost 1,200 points and panic set in. Within a week Obama was back on top by 6 points and stayed there. On September 13, 2008, Timothy F. Geithner, then president of the Federal Reserve Bank of New York called a meeting on the future of Lehman, which included the possibility of an emergency liquidation of its assets. The decision to let Lehman go under, after all, turned out to be a catastrophic error, and we're still suffering the consequences of it. Earlier in the year the government bailed out Bear Stearns but chose to let Lehman fail. In his written responses to questions from the Senate Finance Committee, the Treasury nominee Tim Geithner explained the decision to let Lehman Brothers fail as the result of … well, actually he didn’t really explain why the government let Lehman Brothers fail. There is reason to believe that Geithner was promised the position of Secretary of Treasury by Obama assuming that Obama was elected. Could be just another conspiracy theory or maybe?

Government jobs

The question is do you want a government that does things for you or a government that makes it easier for you to do things for yourself. Do you want unemployment checks or a job? Do you want more college loans or lower tuition? Do you want equal opportunity or equal results? Do you want leadership that helps you to grow or do you want leadership that creates opportunities for growth. Do you think government jobs are just as good for the economy as private sector jobs? Do you believe it is OK to take money from people who have earned and give it to people who have not? Do you understand that while both the private sector and government can create jobs but only the private sector creates wealth?

North Dakota

Having lived in North Dakota for 25 years, I understand the people there. They are conservative and independent. When Grand Forks was hit with a flood, a blizzard and a fire that destroyed the town it only took a short time to rebuild it. They are mostly second generation Scandinavian and German stock and understand the work ethic and being responsible for your own behavior. There is an oil boom going on there and this past week the citizens were given an option to use oil money to replace property tax and they turned it down by a vote of 76% to 24%. The reason is that they want to keep control of the schools close to home and not allow the state to but in which would have happened if the state started paying. This shows that they are willing to walk the talk. They were willing to pay out of pocket for principal. I am not sure how many other communities would do this but my guess is not many.

In the news today a study shows that 30% of students with loans are dropping out and end up with no degree and lots of debt. Here is an essay I wrote a few months back on this topic. When I hear people say that they cannot afford to go to college I just flat out do not believe them. What they may be saying is that they cannot afford to go to the college of their choice and that I can believe. In today’s America there is a college within driving distance of almost every town and kids can stay at home and go to a local school. Their parents can continue to supply room and board as they have and the child can work summers and part time and earn enough to provide for their books, tuition and fees along with enough to pay for their transportation cost. Tuition and fees run about $5,000 per year here in Minnesota. Upkeep, gas and insurance cost about $2,500 per year. Working at a fast food or equivalent place earning $8 per hour this $7,500 can be earned in about 1,000 hours. A kid can work 100 hours per week for ten weeks in the summer. I lived in Springfield, IL when I was growing up and I graduated from high school in June of 1955. At that time there was no college in the state capital of Illinois and so I had to go away to school. I worked full time and went to school part time at Miami University of Ohio and after nine years I graduated with a BS in Chemistry. There were no student loans and I was not smart enough to get a scholarship so I paid my own way, something that I am very proud of to this day. When I graduated I had a job with nine years work experience and money in the bank. Today with the student loan programs the kids graduate in four or five years but have no work experience, lots of debt and often no job. I believe these student loan programs are just one more example of the unintended consequences of good intentions. Those who believe in the government taking care of the citizens will defend this program but they often times are more interested in maintaining control over people than helping people help themselves. These loan programs were started along with many other government programs in the Great Society and as soon as they were available most colleges started to increase tuition to accommodate for the excess cash that would be forthcoming from the government. Most informed elected officials know all of this but they are not interested in changing it because it was power and control they were after and that is what this program gives them. Recent proposed changes to move these loans from the private to the public sector further increases their control.

Teacher pensions

This is some information on unions that might be of interest to you since teachers are under attack in several states. General Motors is in the news because it has taken government money to survive and is now owned by the government and the union but GM is in some ways typical of other large corporations in that they all have large legacy cost. Legacy costs are the commitments made to employees in the form of retirement benefits which include among other things pensions and health insurance. Today GM has unfunded legacy costs of about 200 billion and the 600 million shares of outstanding stock can be purchased for 1.5 billion dollars. This is the culmination of 50 years of mismanagement. Many years ago the company president had a long term plan usually 10 to 20 years and his strategy was developed on that basis but in the early 60's things begin to change. The president's horizon shortened and over the next ten years it dwindled to planning for the next quarterly dividend. The pressure on CEO's mounted and they had to show a good dividend to keep investors happy. If the value of the dividend fell then investors looked for other vehicles in which to place their capital and the CEO's job was in jeopardy. This was highlighted when it came time to negotiate a new contract with the union and the result was to pacify the union members with increased benefits instead of increased salaries. This allowed the CEO's to avoid a strike and pushed off payment into the future and thus preserving the current dividend. By the time payments came due this CEO was on his way to either a higher paying position or to retirement. So here we are today with a company that has committed payments to its retirees that are worth 130 times more than the entire company is worth. What idiot would ever purchase a company in that position? Only the federal government could be that stupid. In the Minneapolis School District there are 3,300 teachers and 6,700 support staff. 1,500 of the support staff are members of the teachers union. If the teachers select a candidate who will negotiate contracts that are favorable to teachers and then work to get them elected, they have a very good chance of winning. If each teacher and spouse vote for a particular candidate that is 9000 votes. Now if they get their parents to vote that is another 18,000. Next if they have coffee parties and invite the neighbors plus make a small campaign contribution they can just about guarantee a win for their candidate. The proof of this is that No DFL-endorsed candidate for the board has lost in at least 20 years. Here are the results from the last school board election and it is easy to see why someone with a 27,000 vote head start will be the likely winner and you can be assured that all the teachers do vote. 3 seats 131 of 131 precincts (100%) Lydia Lee * 61,623 Jill Davis 58,998 Carla Bates 54,691 Sharon Henry-Blythe * 39,476 Kari Reed 33,118 Doug Mann 28,416 This is why it is necessary for there to be a disinterested third party to negotiate contracts. Some thing similar to arbitration